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While falling oil prices dominate the news, there is longer-term interest in how the U.S. energy profile is changing. With only a couple of minor blips the United States has been steadily reducing the amount of energy consumed per dollar of GDP created. The biggest question, looking forward, is whether or not efficiency gains will continue to outstrip increases in the various end-use sectors, according to this new analysis from Deloitte University Press.

Only 27% of the 102 large-company North American CFOs responding to Deloitte’s most recent CFO Signals™ survey believe energy prices will be higher in a year, and less than 25% said their energy price expectations are affecting their companies’ pricing plans. The exception are Energy/Resources CFOs, with 31% expecting higher energy prices in a year and 60% saying those expectation are impacting their pricing plans. Overall, CFOs said prices are largely back to pre-recession levels and are headed higher.

For CFOs, now may be the time to take stock of your energy portfolio, rebalancing and derisking it for the future. Why? The favorable energy supply and price environment enjoyed currently in the U.S will likely erode as domestic and global markets adjust to new energy supply and demand realities. Learn key observations related to the energy and water markets and why CFOs should take advantage of an energy future that has been largely reshaped over the last few years.

Deloitte Views & Analysis

Non-U.S. companies pursuing cross-border M&A or otherwise investing in the U.S. face many decisions as they consider when, where and how to do so, as well as potential regulatory hurdles. Whether to acquire or go greenfield, how a U.S. investment might support the global growth strategy and what brand issues an investment might present are just a few questions CFOs and other C-suite executives should consider as they begin identifying potential targets for investment and possible challenges.

Tax considerations can be among the most important issues for non-U.S. companies pursuing cross-border M&A or direct investments in the U.S. Beth Mueller, a partner at Deloitte Tax LLP and U.S. Inbound Services leader, discusses ways to approach some of the critical tax considerations highlighted in the report, "Branching Out: 10 Questions for Inbound U.S. Investors," and issues CFOs should address with their tax directors when evaluating and planning an inbound investment.

As the likelihood of encountering IFRS with respect to a potential target increases, it’s important for CFOs of acquisitive companies to understand the differences between IFRS and U.S. GAAP and the potential impact on deal structuring and modeling. Differing local country or company interpretations of IFRS may result in challenges related to benchmarking and valuation multiples as well as increased disputes over purchase price adjustments and earn-out targets.

Businesses Stay Focused on Energy Management Despite Barriers

Businesses remain committed to investing in energy management, but barriers are rising, according to the Deloitte reSources 2013 Study from the Deloitte Center for Energy Solutions. The third annual study provides insights on emerging trends in energy management that can help executives make energy and energy management related investments and business decisions. The survey, conducted with the Harrison Group, a YouGov Company, is based on online interviews with more than 600 business decision-makers and more than 1,500 consumers.

The study found that businesses and consumers remain focused on energy conservation even as the economy and business environment improves, says John McCue, vice chairman, U.S. Energy & Resources Industry leader at Deloitte LLP. “The energy solutions and management markets are growing areas of customer energy spend as corporate and individual end-users become increasingly sophisticated and thoughtful about how they purchase energy, a trend that this year’s survey shows is continuing in the post-recession economy. With electricity demand flat, these emerging, electricity-adjacent markets can be important revenue growth opportunities for power and utility companies, as well as for retail energy providers,” he adds.

But while managing energy consumption and associated energy costs remains strategically important to many American businesses, this year’s reSources Study results show that businesses continue to face an uphill battle in energy management. “Although a majority (57%) of respondents say they have been at least somewhat successful in achieving their energy management goals, and about one-third report being extremely or very successful, 70% expect that cutting their electricity usage further will become more difficult,” observes Marlene Motyka, U.S. Alternative Energy leader and principal at Deloitte Financial Advisory Services LLP.

The survey also uncovered shifts in business’s perception of energy management’s importance to their financial competitiveness and in their motivations for pursuing energy management strategies. “Energy management efforts are still viewed as critical to competitiveness, but less so compared with the 2012 survey results,” notes Greg Aliff, vice chairman and senior energy partner at Deloitte LLP. The 81% of surveyed companies who say they consider energy management vital to their financial competitiveness is a 4% dip from the 2012 results, while the 76% of businesses that view reducing electricity costs as essential to staying competitive from an image perspective is down 5% from last year.

Moreover, more companies say they are engaging in energy management now because they have to. Regulatory requirements were cited by 36% of surveyed businesses as a motivating factor for energy management, up from 32% in 2012. By contrast, cutting costs, while still the primary motivation for energy management, was cited by 63% of survey respondents, down from 66% last year.

The Deloitte reSources 2013 Study also uncovered the following emerging trends and practices related to energy efficiency, businesses’ attitudes on energy consumption and their progress toward energy-related investment goals:

Most businesses are achieving goals, but success is becoming harder.

89% of companies have set goals regarding electricity and energy management practices.

68% reported that rolling out new electricity-related practices in their companies involved unanticipated ‘hiccups,’ compared with 65% last year and 56% in 2011.

Bureaucracy becomes the biggest barrier.

One-third of companies say bureaucracy is a primary barrier to achieving their electricity and energy management goals, up from 23% in last year’s study.

Length of time for investment to pay off emerged as the next biggest barrier, cited by 30% of businesses.

Lack of dedicated staff (25%) and lack of capital (24%) are also seen as major obstacles.

Businesses remain committed to investing in energy management.

40% of businesses have allocated a pool of funds for investing in energy efficiency programs in 2013, down from 49% in the 2012 study. These funds, however, represent about 14% of their total capital budgets in both years.

Approximately 60% of businesses have pay-off period requirements for their energy efficiency investments, with an average pay-off period of three-and-a-half to four years, similar to 2012.

Slightly more than half (52%) of businesses surveyed have an internal rate of return (IRR) requirement for investments in solutions that provide for greater energy efficiency, with an average IRR hurdle rate of 20%.

One-third generate some portion of their electricity through on-site generation, co-generation or renewables, with another 15% planning to do so.

The average targeted reduction in 2013 across electricity, natural gas, transport fleet and carbon footprint was 19%, compared with 24% in 2012.

More than two-thirds (69%) of respondents have set goals related to natural gas consumption in 2013, up from 58% in 2012.

62% of businesses say they have goals to improve the energy efficiency of their transport fleets, up from 51% last year.

Many companies are not actively pursuing renewable energy incentives.

About two-thirds (64%) of business surveyed find it very difficult to follow or keep up with financial/tax incentives available for alternative/renewable energy investment and/or use, down slightly from 67% in 2012.

Only 17% of businesses surveyed say they are very active in tracking tax credits and incentives associated with renewable energy investments, dropping two points from 2012.

31% of companies report participating in green/renewable energy programs from their electricity providers; 16% say they have participated in the past but not anymore.

Cost is the top barrier to participation, cited by 38% of those that have not participated in green energy programs.